In Topeka, Kan., in June, the American Legislative Exchange Council (ALEC) released the highly anticipated fourth edition of its Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. The new study explains how states can most effectively drive economic growth, create jobs, and improve the standard of living for their citizens. It provides state legislators with a valuable resource for realistic, responsible state policymaking. Its recommended sustainable government spending and pro-growth tax policies are more critical than ever, as unemployment remains high and the economy is slow to recover.

"It is true that the policies of the federal government have a direct effect on the economic environment of the entire country, but governors and legislatures are not rudderless," Kansas Gov. Sam Brownback said as Rich States, Poor States was released. "We can and must start to change our country's economic course by providing an environment that rewards our citizens for their efforts and their risks. The founders of our country understood that a republic with its multiple states was the perfect incubator for vetting competing approaches to public policies. ALEC's Rich States, Poor States illustrates the outcomes of various tax policies at the state level throughout the country."

Specifically, Rich States, Poor States analyzes the real effects of current policies within each state and ranks the states according to their economic growth. The publication outlines two sets of state rankings. An economic-performance ranking is based on the past 10 years of economic data and takes into consideration income, population and job growth. An economic-outlook ranking uses 15 policy variables, including various tax burdens, recently legislated tax changes, regulatory burdens, and labor policy.

The authors analyze state policies to determine just what problems exist within the states. World-renowned economist and co-author of the report Arthur B. Laffer explains that "current state budgets are unsustainable, and we can't blame the problem on insufficient tax revenue." Laffer advises, "Increasing taxes on productive activities, such as working, saving, or investing only discourages economic output and diminishes the potential for real economic recovery."

Laffer and his co-authors, Stephen Moore, senior economics writer at The Wall Street Journal, and Jonathan Williams, director of ALEC's Tax and Fiscal Policy Task Force, show what happens when the government dictates economic transactions. States that have increased their tax rates, spending programs, and business regulations have only aggravated their economic plight. Data from the latest U.S. census reveals how taxpayers vote with their feet, moving to states with greater economic freedom and more competitive business climates.

Utah, according to the study, has the top-ranked economic outlook; New York has the lowest rank.